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OECD points to slowdowns in China and India

The economies of China and India are likely to grow more slowly in coming months, according to the Organization for Economic Cooperation and Development's composite leading indicators.

The Paris based think tank Monday said its leading indicator of economic activity for China fell to 99.1 in April from 99.4 in March, while its leading indicator for India fell to 98.0 from 98.2. A reading below 100.00 indicates growth will be below that country's long term average.

OECD said that "The assessment for China and India has changed significantly since last month.”

China's central bank Thursday cut its key interest rate in a surprise move designed to boost growth in the world's second-largest economy. That move followed a string of initiatives from the government which include purchase incentives for energy efficient household appliances, targeted tax cuts and accelerated approval for investment projects by companies and local governments.

The OECD said the composite leading indicator for its 34 members rose to 100.5 in April from 100.4 in March, signaling continued growth.

But the indicators point to significant divergences, with the U.S. and Japan set for growth that is stronger than the long-term average, while most European economies are set for growth below the long-term average.

OECD said that "In France and Italy the CLIs [composite leading indicators] continue to point to sluggish economic activity. The CLIs for Germany, Canada, the United Kingdom and the euro area as a whole continue to point towards economic activity slightly below long term trend."

According to OECD figures, the combined gross domestic product of its 34 members during the first three months of 2012 rose 0.4% from the fourth quarter of 2011. That marked a pickup in the quarter-on-quarter rate of growth, which was 0.3% in the three months to December.

The OECD's leading indicators are designed to provide early signals of turning points between the expansion and slowdown of economic activity, and are based on a wide variety of data series that have a history of signalling changes in economic activity.